How To YieldBoost GDEN To 12.2% Using Options
November 07, 2024 at 11:40 AM EST
Shareholders of Golden Entertainment Inc (GDEN) looking to boost their income beyond the stock's 3.2% annualized dividend yield can sell the June 2025 covered call at the $35 strike and collect the premium based on the $1.70 bid, which annualizes to an additional 9% rate of return against the current stock price (at Stock Options Channel we call this the YieldBoost), for a total of 12.2% annualized rate in the scenario where the stock is not called away. Any upside above $35 would be lost if the stock rises there and is called away, but GDEN shares would have to climb 13.9% from current levels for that to happen, meaning that in the scenario where the stock is called, the shareholder has earned a 19.5% return from this trading level, in addition to any dividends collected before the stock was called.